For HBO, a la Carte Programming Is Still a Ways Off, Says Eric Kessler

Eric Kessler has worked at HBO for more than two decades in various capacities, overseeing everything from program licensing to digital strategy and marketing. He’s been in the business a long time, seen the pay-TV programming evolution firsthand, and played a role in it, as well.

Put it this way, he’s the guy who came up with the slogan “It’s Not TV. It’s HBO.” — after a decade, it remains part of the cable TV vernacular. Today, he’s got his hands full mapping out a viable digital strategy while remaining tethered to the cable-TV cash cow and fending off new rivals like Netflix and Amazon that are mounting assaults on its business.

As the first order of business at today’s D: Dive Into Media interview, Kessler confirmed that HBO’s HBO Go App is now compatible with Apple’s AirPlay, and HBO subscribers who have been pining to stream HBO shows from their iOS devices to Apple TV can now do so. “Our long-term plan for Go is to be across all devices, and effective today, we will be enabling AirPlay,” Kessler said, adding that Apple TV support will follow “at some point.”

At some point.

And when that day comes, might it be accompanied by a la carte programming? At some point. But Kessler argued that the time for that is still quite a ways off. The economics simply aren’t there.

“In marketing HBO, we are targeting the people who most love TV,” Kessler said. “There are 70 million households that love television. And the average HBO household watches far more TV than the average TV household. So we are targeting the people who are most likely to buy our product.”

Makes sense, but why not also target the fast-growing audience that wants HBO untethered from the TV? Simple. It’s too expensive.

“Is there a broadband segment that wants HBO?” said Kessler. “Yes, of course. But when you look at penetration rates, at disconnect rates, at infrastructure and marketing costs, the economics are just not particularly compelling … That doesn’t mean that’s not going to change at some point, though.”

So, for now, HBO Go will remain largely as it is today: You’ve got to be a subscriber to use it. That might seem unnecessarily limiting, but Kessler said HBO still gets a lot out of it, even if it’s not bringing in money as a cord-cutter subscription service. It serves an important marketing function. People who watch HBO programs on HBO Go are generally more apt to talk about it online (obviously). “HBO Go usage seems to engage people in social conversation about these shows,” Kessler said. “‘Girls’ viewership increases as more people talk about it on Twitter and Facebook.”

What about other emerging schemes for building viewership? Netflix has recently been in the news quite a bit for its “House of Cards” series, which the company released as a 13-episode bundle. That’s a strategy HBO has embraced for its archival programming, as well, and with a great deal of success. Viewers can use it to catch up on old seasons of their favorite series — obviously, there’s a great deal of value for some in binge-viewing five seasons of “The Wire” back to back.

“When we launched the browser version of HBO Go, we only had about 400 hours of content,” Kessler said. “When we launched the app, we decided to put every episode of every season up there. And what we have seen over the last two years is that the people who use the app will binge-view. They’ll watch stuff to catch up. But that’s the edge case.”

So, is it wise to give a brand-new series like “House of Cards” that stuff-yourself-silly treatment? Kessler seemed dubious. Serializing shows in the old-school TV way plays a big role in building buzz, he explained. If you offer a series in its entirety when it debuts, you forfeit that “Who Shot J.R.?” anticipation. Just think about that final, infamous episode of “The Sopranos.”

“The finale of ‘The Sopranos’ was one of the most talked-about finales in the history of television,” Kessler said. “That show was on the cover of newspapers the next day. It was being talked about on morning radio and TV. If we had distributed the season all at once, we would have lost that.”

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